Look, everybody's different. And when we sit down with folks on the traditional financial planning side of things, we say, this is your life. These are your resources. What do you want it to look like?
Welcome to Keenan Retirement, a show dedicated to helping you thrive before and during your retirement years. If you are looking to grow and protect your wealth and want to get the second half of your life, the best half, then listen in as well as advisor Bill Keenan and his host sort through the key issues that you need to know in a lively and candid way. Hello, everybody. And welcome back to Keenan Retirement.
I'm your co-host, Steve Sandusky, and we're going to do something a little bit different with today's episode. And I think you're really going to enjoy it. We're going to talk about five ways to retire right and enjoy this amazing new stage in life. And we're going to do a little bit differently than we normally would.
Now, Bill and his team at Keenan Wealth know that retirement is just around the corner for many of our regular listeners and readers. And for those of you that are already retired, this is going to be a nice review of the things to review and consider along your journey in retirement. In fact, some of you may have started 2019 with a resolution to make this your last year a full-time work. And once you've decided to retire and that reality starts to sink in, the scope of this life change can be very daunting.
And then there's all the questions such as, do I have enough money to retire? What am I going to do with all this free time? Where should we live? What happens to my health insurance?
Am I going to drive my spouse crazy? Or am I going to drive myself crazy? Well, don't worry. We've got you covered with this special episode of Keenan Retirement.
Bill went back into some of the past podcasts that we've done and the blog posts that we've written to put together this primer on five ways that you can prepare to, quote, retire right and smooth your transition into retirement. And regular listeners know that Bill and his team love chuckless. So if you work your way through these steps, I think you're going to come out feeling more prepared for retirement than more excited about the possibilities for this next stage in your life. Now, Bill has mentioned more than once on the podcast that the number one question he feels from folks is how much money do I need to retire?
And there's really no one size fits all answer to that question. You know, you might see articles online about numbers that you have to hit and you're saving and investing accounts, you know, that sort of thing. But the truth is, no two retirements are going to be exactly alike. So no two people are going to have the same financial needs in retirement.
And rather than answering the question, how much money do I need to retire, Bill likes to start his process by helping clients arrive at a clear understanding of how much income they need to retire comfortably so they don't worry about running out of money. Now, notice that word worry. A key point that Bill is trying to make here is that so many retirees who have worked hard and been diligent in following their financial plan to get to retirement end up so concerned about running out of money that they don't enjoy themselves. So let's listen to Bill describe the importance of shifting from a saving mentality into a reward mentality once you do retire.
That's exactly why the planning process is so important. And you know, we've talked many times about the checklist driven process for going through all the issues with related to getting yourself ready to be able to retire. And that can be looking at what taxes will look like social security, of course, health care, costs in retirement, inflation spending like we're talking about today. All those things need to be looked at and accounted for.
But when somebody has a plan in place and they've looked through it and thought about it and pre committed, what's happening is, yes, technically the plan is correct. But what we've also done is we've given people that permission, self permission to spend the money they've allotted. And you know, there's a lot of people, a lot of people that we've worked with over the years that end up having more money at the end of their life than they've ever had in their life. And that's okay.
That's okay if that was their plan and their intention. But one thing we like to say to folks is within reason now is enjoy this. You worked so hard in your life to build these assets. Please don't feel guilty about enjoying these resources within the confines of the plan that we've all set down and put together.
That's why it's so important to have a plan. Yes, the technical aspect needs to be correct, but also giving people permission to go ahead and live life and not be under anxiety and stress all the time thinking that they're compromising themselves is every bit as powerful as having a technically accurate plan in place. One way to help yourself make that reward shift and feel a little more confident about your finances is, you guessed it, a keen wealth advisor's checklist. And to make sure you're financially ready to retire and won't run out of money, Bill recommends that you start with four items.
So here they are. First one, make a budget. Some people go their whole working lives without budgeting. But once you switch from living off a salary to living off your savings and retirements, then budgeting is going to become critical to your peace of mind.
A second thing we want you to do is pay down your debts specifically. Bill says look at any credit cards or vehicle loans that carry a high interest rate. And if you have a mortgage that you want to pay down before retirement, that can be very beneficial too. And also including fixed rate mortgage payments in your retirement budget can make sense as well.
All right. The third thing is make sure your preferred retirement age, retirement accounts and plan for taking Social Security are all in sync. We want you to make sure that you won't be penalized for withdrawing from your retirement accounts if you retire early. And it's usually best to delay taking Social Security for as long as possible so that you can maximize your benefit.
And finally, number four here, Bill wants to make sure you understand that once you stop receiving employer subsidized healthcare, you and your spouse are both going to need individual coverage. That means Medicare, if you're both over age 65 and buying coverage off the marketplace, if one of you is younger. So again, to summarize, step one in Bill's retire right checklist is don't focus on how much money you need to retire. Instead, you and your spouse need to talk about how much money you need to retire comfortably.
Okay. So the second step Bill recommends is figuring out how to spend your money in ways that help you live your best life possible with the money you have. Now, I kind of touched on this a little bit earlier when I talked about why Bill doesn't think how much do I need to retire is the question that retiree should be asking. And if you're too focused on how much money is enough, then the fact is you're never going to have enough.
You see, Bill and his team are trying to help clients understand that money is not an end. Instead, it's a means. It's a tool that you can use to improve your life. And recently, Bill shared a story about a conversation he had with a referral to King Well, who felt pretty confident about his return on investments.
And he was coming to Bill for guidance on how successful retirees use that money for a better return on life. We recently sat down with someone in the firm who was referred into us for some retirement planning help. And this gentleman had been a 40 year veteran of the banking industry, even had some time with the Federal Reserve Bank was in a high position at one of the most prestigious banks and came in to sit down to make sure that he was financially on track to retire. And he had a pretty good idea that he was financially on track to retire because of his financial acumen.
But he still knew he needed help understanding the tax planning, the social security integration, the investments, which are all rates, all the things that we talked about in our podcast and that we counsel folks on here on the specific planning aspects of things and then the investing as well. So understood that he needed help with that, didn't want to do it himself. He certainly didn't want his wife to do it. If it was someday it was just her, if he pre-deceased her.
He said, Bill, I know you've been doing this 27 years. You've seen a lot of people transition from working to retired. And the thing that he really wanted to gain knowledge on and our experience on was right up the alley of this return on life concept. He wanted to know what are people doing as they get on that glide slope to retirement a year out, two years out.
How are they thinking about what they will do each morning? How are people going to wake up and be excited to do, right, Matt? What will inspire them? What will their days look like?
Will they still be happy in this new phase? And most people we go with are pretty well adjusted to their, you know, yes, a lot of their identity is around who and what they were in their career. But most people we work with can detach from that when they retire and move into the next phase reasonably easily. But he had some very legitimate questions about life satisfaction and the overall integration of emotion and psychology with he and his wife around his retirement.
Now, if you're interested in improving your own return on life, Bill actually has a great free tool available on his home page. So I want you to go to keenonretirement.com and you can complete the ROL index. Now, this is a series of 20 questions that will get you thinking about how you are using your money to improve your life in three key areas. And those areas are well-being, progress, and freedom.
So this is essentially a measure of your current life satisfaction. So I think you're going to enjoy taking this. So again, go to keenonretirement.com and take the return on life index. All right.
So the first two steps in Bill's retire right checklist were designed to get you the first step in the first step. So you're going to have to make a life-changing decision in the middle of a crisis. Now, understandably, this is an area of the financial plan that folks tend to avoid because it's just not fun to think about your life without you in it, your assets without you around to enjoy them. But if you don't have an estate plan in place when you or your spouse pass, then what happens is the state in which you reside will settle your estate according to local law.
And Bill knows from experience that this is not the way you want your affairs to be managed. I worked with a client that was a high-profile sports person and they passed away unexpectedly and had no estate plans. So it all became very public. One, this person had received a lot of money in their career.
It was public over the course of their career. And they had very, very little to show for it. But people came out of the woodwork against that estate. So one, it was all public, one of the beneficiaries that did get some money at least now became the targets of fraud, of you name it.
And if you think people aren't looking at frauds, they aren't looking at these probate estates that are public and using that to target unsuspecting beneficiaries, they definitely are. If they go to the links that we talked about in our last podcast with Special FBI agent Jeff Lanza to just scam us through the cyber world, just imagine where you have this stuff come public that's off-actual that they know who got what and when and there's confusion and all those things. So the aspect of making things private, that alone would be a reason to get these affairs in order. Now, another reason that people sometimes put off estate planning is that they get overwhelmed trying to figure out how decisions they make today might affect their heirs 10, 20 years down the road.
Now, here's what Bill had to say about this problem in a recent blog post and I'm quoting Bill here. This is probably the only time you'll hear me say this is about your financial plan, but the easiest way to get going on your estate planning is to narrow your perspective. Frading about what tax laws and giving laws will look like 20 or 30 years from now isn't going to help you make the key decisions you need to make right now. Instead, ask yourself, if something happens to me in the next three to five years, what would my last wishes be?
Use that vision as your guide and as circumstances change in your life and in the world, we can help you revisit your plan down the road and fine tune specific details as necessary. Okay, Steve back here again. All right, so what are those details that you need to nail down? Well, at the bare minimum, Bill says that everyone needs to create a will that outlines your last wishes and explains how you want your estate to be distributed.
A second thing you're going to need is a power of attorney that authorizes someone you trust to act on your behalf in the event that you are incapacitated. I know that's a big word there, or unable to make decisions. We also want you to have a healthcare directive that will dictate how you would like to be cared for in the event that you become incapacitated. And also, you should have a living will, which designates a person to be in charge of making important medical choices on your behalf if you are unable to.
Also, beneficiary designations on life insurance policies and retirement accounts, we want you to have those reviewed and confirmed that they are correct using payment on death or transfer on death on your bank and brokerage accounts and other assets can be an option as well. Okay, in most cases though, taking the time to create a living trust will keep things private and provide more flexibility and customization of your wishes than just a simple will. So that's another thing to think about. Maybe put together a living trust that will keep some of these things private.
So again, let me just kind of refresh here. We're looking at a will, a power of attorney, a healthcare directive, and a living will. And again, we'd also encourage you to consider a living trust. And if you're driving around listening to this, don't worry about taking some notes.
We want you to pay attention to the road there. When you get a chance, you can just simply go back to keenonretirement.com and we'll have all these items listed in the show notes so you can review them when you are ready. Okay, so now that you've got your estate plan in order, the next thing on Bill's retire right checklist is step four, which is know how to keep financial market fluctuations in perspective so you don't get scared into losing part of your nest egg. And this is really important to discuss because if you're newly retired or about to retire, and I'm sure you're well aware, the last year was a bit of a roller coaster for the markets.
And there were some volatility spikes that made some folks nervous. But one key point that we've returned to time and time again on this podcast is that volatility is normal. Now, of course, me telling you that volatility is normal probably isn't much comfort if you're about to retire and preparing to live off of your investments. And on a recent podcast, Bill talked about how market movements and market history aren't just theoretical concerns for the team at King Wealth.
They're the reality that they help clients cope with every single day. This is not theoretical now. Majority of our clients are in what we call the distribution phase of their investment career. Not all, but most if you're retired and you have a pool of assets, stocks and bonds and other investment classes, you and your family are relying on that investment collectively to produce income for the rest of your lives.
And hopefully that that income will increase as well with the cost of living as inflation proceeds forward out into the future. And so this becomes very real. And again, it's not just something that we're theorizing about or talking about on CNBC. This is something that we're having to do on the ground in the trenches for clients.
And I've been at this for over 25 years through a couple of the worst corrections that the markets have ever seen. And so when folks start to ponder this, we have this environment, these capital markets, the political environment, the geopolitical environment, all these things that are happening, and they feel at times kind of out of control or ominous or scary. And so to your point, a month like October can make folks think, wow, are we going to be okay? And the first thing we say is you have to have a financial plan in place where you've articulated how much money do you need to live on?
What will the taxes be? How will Social Security integrate with those things? What are the right decisions there? What will health care costs look like?
Really get a plan for all those things and work within the guardrails of the financial plan. But then the engine to the plan, these investments that we are talking about today have to perform for you over the long term. So it's where the rubber meets the road. And for us, the strategy that's gotten our clients through is making sure that we don't have investments in the equity markets.
And sometimes we use words like equity. Well, that means stocks. When I say it, it means a diversified portfolio of some of the strongest stocks in our opinion that exist. And it means that we don't have money in those things that can be volatile, that we're going to need back within, call it five years or so.
That's kind of the minimum that we look at, Matt, isn't it? And then some folks, if you talk about it in that context, they can get their mind around. All right, we have investments in the stock market that will be volatile. Let me talk about that up front.
We're not saying it won't be. It will be. But we don't need those dollars back within, call it five years. And in some cases, folks have more than that.
They have maybe 10 years of their income needs invested in things that are more fixed. Folks having an understanding of that strategy is what gets them through these times. It helps them sleep at night and helps them understand why we're doing what we're doing. And it's not just some things, Steve.
Like, hey, if you're 70 years old, you should have 70% of your money in bonds, which was an old back of the napkin thing. From years ago, it's more about what do you need these assets to produce for you. Now, let's think through it. Let's reverse engineer where you should be and then understand what volatility you're going to be looking at.
But for our talk today, we go back in history and we talk about how things have worked. And what we see is that, like you say, past performance doesn't guarantee future results, but time up to this point has always healed. So if you can get through the down times and not panic and make an emotional decision, sell everything out at the wrong time, or you don't have money in the markets that you need back, so you have no choice. You have to sell at a bad time.
Then we can navigate these times that are coming at us, whatever happens, and be okay. Once again, for Bill's team, it comes back to customizing financial plans to suit the unique needs of you, the client. This strategy of diversification, strategic rebalancing, and a five-year reserve of emergency cash is pretty dependable across the board. But the specifics of how those assets are going to be allocated and which levers are going to be pulled, those are going to depend on your financial situation and your retirement goals.
And again, you can check out the show notes for some links that explain how this strategy allows you to maintain an income stream during volatile times. Alright, we've reached the final item on Bill's retire right checklist, and that's number five, which is have an idea of how you'd like to spend your time and retirement, so your days are fulfilling and you look forward to each one of them. Now, the good news about your retirement compared to your parents, or maybe your grandparents' retirement is that not going to work. It's going to last longer.
The advances in medicine, preventative care, nutrition, and exercise that we enjoy today mean that many people are living longer than the folks in the past. Now, the bad news is you got to find more things to do in that retirement. So here's Bill. This is just the last couple of generations issue to deal with.
As you mentioned, people weren't working a full lifetime and then having 20 and 30 years to enjoy things. It truly was nine to five to 65, watched TV maybe for two or three years and past. And so this is a problem of prosperity, I like to say. These issues that folks have to think about and get their arms around.
But let me talk about the things that I'm seeing most people doing that are helping them thrive at this point. One of the things I would say initially is identifying what's most important to them, what means the most and focusing on that. We'll get clarity on it here in our talk today and focus on some of those things. But what really means the most?
And this is something that I coach people to do several years before they actually retire. Number one of the list for most people is time. So the opportunities that come into play with retirement is time. And that would be time with a spouse, if they're married, time with children, time with grandchildren.
And right behind those or even almost equal is being able to focus on health, being physically fit, working on those things that in most cases got set aside when someone spent 40 hours or more at a desk all week. Now in a recent blog post, Bill talked about retirement being in art. And that's A for activity, R for relationships and T for time. Bill said the things you do in retirement should be meaningful, stimulating and energizing.
Your passions should be your guide to a new routine both with your spouse and apart from him or her. Alright, so what is Bill talking about here? Well, it could be things like taking professional lessons to improve your golf swing. It could be traveling more.
It could be visiting friends, visiting your grandchildren. It could be devoting more time to hobbies like writing or painting or crafts. And for some people, it's working part time, volunteering or even starting a new company. Here's Bill with some more examples.
I have someone who was a commercial pilot, his entire career, well respected gentleman and retired and that was his passion. And he now in retirement flies charter work just very part time. But this is something, and we'll talk about this as well. He's actually generating some revenue from that.
But he's doing something that he's loved his entire life. But now he has time to do it on his terms, in this case. I had another fellow who was into cycling when he was much younger and had gotten away from it over the course of the years he was working. And retired, got back into cycling, lost a substantial amount of weight and got into literally some of the best shape of his life.
And was able to now he's a competitive cycler, even rode in the senior Olympics down in Texas here in one of the past years. So seeing these things, whether it's a hobby that someone has done in the past or it's a brand new one, it's pretty inspiring to watch people evolve and grow and really focus on the things that help them thrive. Figuring out what your art is going to be, how you're going to spend your time in retirement, and who with isn't always as easy as it may sound. In fact, Bill tells his clients to expect and even embrace some trial and error as they discover what's going to make their retirement more fulfilling.
Look, everybody's different. And when we sit down with folks on the traditional financial planning side of things, we say, this is your life. What's your resources? What do you want it to look like?
Not what some financial firm tells you your life should look like or not what the culture tells you your life should look like. What do you want it to look like? So we're just trying to shine a light and help people give them new tools for thinking. It's interesting because not many places do we have tools for thinking about these things.
And I think the traditional financial planning focus is just on numbers. And yes, it's great to have the numbers right, measurement, those kinds of things. This provides an baseline and a way to measure these things in a way that each person wants to design their own life for. So to recap, here's Bill's five keys to retiring right.
Number one, have a clear understanding of how much income you need to retire comfortably so you don't worry about running out of money. Number two, know how to spend your money in ways that help you live your best life possible with the money you have. Number three, have the basics of your estate planning documents in order so you don't have to make a life-changing decision in the middle of a crisis. Number four, know how to keep financial market fluctuations in perspective so you don't get scared into losing part of your nest day and number five.
Have an idea of how you'd like to spend your time and retirement so your days are fulfilling and you look forward to each one. Alright, I hope you will click on over to keenonretirement.com and on the show notes page we'll have all the links to the past blogs and podcasts with a lot more information on these important topics. And if I could do a little ad living here and add a step six to Bill's list, it would be to reach out to the folks at Keenewealth Advisors with any questions or concerns that you might have. Because when it comes to financial planning, there's real value and real peace of mind to working with fiduciary advisors like Bill and his team at Keenewealth Advisors.
If this is the year and you're getting ready to make this transition into retirement, or you are already retired and want to make sure your plan is on track, make an appointment and talk to Keenewealth Advisors about how they can make this process as smooth as possible. Alright, well that's it for this show. Appreciate you listening and we'll talk to you on the next episode of Keen on Retirement. The opinions expressed in this podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security.
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